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Fakultas Ekonomi dan Bisnis
School Economics and Business
LEARNING OBJECTIVES
Telkom University
Telkom University
The Concept of Business and Profit
Business
An organization that provides goods or services that
are then sold to earn profits.
Profits
The positive difference between a businesss revenues
and its expenses. The rewards owners get for risking
their money and time.
Labor Capital
Information
Resources
A. Entrepreneurs: People who are willing to accept the risks that are
part of creating and operating businesses, in return for the
potential profits.
B. Physical resources: Tangible things organizations use in the
conduct of their business. Possibilities include natural resources,
raw materials, office equipment and facilities, computers,
transportation and communication infrastructure, etc.
C. Information resources: Data and other information used by
business. This factor has become increasingly important in the
last decade.
Depression:
Severe and long-lasting recession
Fakultas Ekonomi dan Bisnis
School Economics and Business
Economic Environment
Telkom University
Examples:
If an economy is doing well enough that most people have
jobs, a growing company may find it necessary to pay higher
wages and offer more benefits in order to attract workers
from other companies.
If many people in an economy are looking for jobs, a firm
may be able to pay less and offer fewer benefits.
Economic Systems
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Economic System
A nations system/methods for allocating its resources
among its citizens, both individuals and organizations
Factors of Production are the resources.
Planned Economies
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Communism
A system Karl Marx envisioned in which individuals would
contribute according to their abilities and receive benefits
according to their needs.
The government owns and operates all factors of
production.
The government assigns people to jobs and owns all
businesses and controls business decisions.
Market Economy
Individual producers and consumers control
production and allocation by creating combinations of
supply and demand.
Market
A mechanism of exchange between buyers and sellers
of a good or service.
Market Economics
Telkom University
FIRMS HOUSEHOLDS
Deregulation
Telkom University
Telkom University
Interactions
Telkom University between Business and Government
Telkom University
Telkom University
Demand
The willingness and ability of buyers to purchase a
product (a good or a service).
Supply
The willingness and ability of producers to offer a
good or service for sale.
economic
2009 Pearson Education,
systems chapter1Inc.
2012 canadian ed. 31
31 Creating the great business leaders
Fakultas Ekonomi dan Bisnis
School Economics and Business
Economic Indicators
Telkom University
Economic Indicators
Statistics that show whether an economic
system is strengthening, weakening, or
remaining stable
Measure key goals of the economic system:
economic growth and economic stability
economic
2009 Pearson Education,
systems chapter1Inc.
2012 canadian ed. 32
32 Creating the great business leaders
Fakultas Ekonomi dan Bisnis
School Economics and Business Economic Indicators
Telkom University
economic
2009 Pearson Education,
systems chapter1Inc.
2012 canadian ed. 33
33 Creating the great business leaders
Fakultas Ekonomi dan Bisnis
Economic Growth: Aggregate Output, and
Standard of Living
School Economics and Business
Telkom University
The elements:
Business Cycle
The pattern of short-term ups and downs
(or, better, expansions and
contractions/reductions) in an economy.
economic
2009 Pearson Education,
systems chapter1Inc.
2012 canadian ed. 34
34 Creating the great business leaders
Fakultas Ekonomi dan Bisnis
Economic Growth: Aggregate Output, and
Standard of Living
School Economics and Business
Telkom University
The elements:
Aggregate Output
Growth during the business cycle is measured by
the total quantity of goods and services
produced by an economic system during a given
period. It measures the growth during the
business cycle
economic
2009 Pearson Education,
systems chapter1Inc.
2012 canadian ed. 35
35 Creating the great business leaders
Fakultas Ekonomi dan Bisnis
Economic Growth, Aggregate Output, and
Standard of Living
School Economics and Business
Telkom University
Standard of Living
The total quantity and quality of goods and
services that consumers can purchase with
the currency used in their economic system.
economic
2009 Pearson Education,
systems chapter1Inc.
2012 canadian ed. 36
36 Creating the great business leaders
Fakultas Ekonomi dan Bisnis
School Economics and Business
economic
2009 Pearson Education,
systems chapter1Inc.
2012 canadian ed. 38
38 Creating the great business leaders
Fakultas Ekonomi dan Bisnis
School Economics and Business
Economic Growth
Telkom University
Productivity
A measure of economic growth that compares how much
product a system produces with the resources needed to
produce that product.
Productivity: output/input (resources used)
If more product is produced with fewer factors of production,
the price of the product decreases.
The standard of living in an economy improves through
increases in productivity.
economic
2009 Pearson Education,
systems chapter1Inc.
2012 canadian ed. 39
39 Creating the great business leaders
Fakultas Ekonomi dan Bisnis
School Economics and Business
Balance of Trade
Telkom University
economic
2009 Pearson Education,
systems chapter1Inc.
2012 canadian ed. 40
40 Creating the great business leaders
Fakultas Ekonomi dan Bisnis
School Economics and Business FIGURE 1.4 Balance of Trade
Telkom University
economic
2009 Pearson Education,
systems chapter1Inc.
2012 canadian ed. 41
41 Creating the great business leaders
Fakultas Ekonomi dan Bisnis
School Economics and Business
Telkom University
Stabilization Policy
Coordinating fiscal and monetary policies to
smooth fluctuations in output and
unemployment and to stabilize prices.
economic
2009 Pearson Education,
systems chapter1Inc.
2012 canadian ed. 43
43 Creating the great business leaders
Fakultas Ekonomi dan Bisnis
School Economics and Business
Types of Policies
Telkom University
Monetary Policy:
Designed to control the amount of money flowing around the
economy (the money supply).
This policy is used to tackle inflation and balance of payments.
Methods under this policy:
1. Interest rates:
2. The government may impose restrictions on financial
institutions to affect borrowing.
3. The central bank can control bank assets and the amount of
lending. Level of reserves
Types of Policies
Telkom University
Fiscal policy:
Aims to control the total spending in the economy.
1. Government spending.
2. Change in direct taxation.
3. Change in indirect taxation.
External Environment
Everything outside an organizations boundaries that might affect it
and business cannot control
1. The domestic business environment
2. The global business environment
3. The technological environment
4. The political-legal environment
5. The socio-cultural environment
6. The economic environment
2009 Pearson Education, Inc.
economic systems chapter1 2012 canadian ed. 47
47 Creating the great business leaders
Fakultas Ekonomi dan Bisnis
School Economics and Business
Technological Environment
Telkom University
Political-Legal Environment
School Economics and Business
Telkom University
The regulatory relationship between business and the government (legal
system) and its agencies that define what organizations can and cant do:
1. Product identification laws (ingredients to be listed).
2. Local zoning requirements e.g., obtain a license to operate
3. Advertising practices
4. Safety and health considerations, warnings on cigarette packages.
5. Acceptable standards of business conduct, pollution
Pro- or anti-business sentiment/attitude in government and political stability
are also important considerations, especially for international firms.
Socio-cultural Environment
Telkom University
Telkom University